If you’re a borrower who tried to negotiate the terms and interest rates on a student loan, you must already know that lender holds the most power.

Students with existing education loans are legally bounded in an agreement, and there isn’t much benefit for the lender to give them a break. Similarly, those who are still shopping for education loan finance don’t have enough time for negotiation and dialogue. They are usually proposed with computer-generated terms and rates, and are required to pick a plan that best fits their needs and requirements. Lenders often don’t work individually with each potential borrower to create a customized plan—unlike Education Loan Finance (ELFI), which offers flexible terms, personalized rates, and guidance from a Personal Loan Advisorthroughout the process.

While most private student loan lenders might want borrowers to assume that there’s no spot for negotiation, if you are well-prepared, you can get the lender to take a step back. Here are some situations when you have the edge over the lender and how you can leverage it to your advantage. This advice was given by Southland CU, a premium Los Angeles County credit union.

Before Signing The Contract For An Education Loan

Potential borrowers have the leverage to negotiate the terms of the agreement. From a consumer behavior perspective, if your lender isn’t open to modifying the terms, you can go to another student loan company.

Unfortunately, you cannot just communicate your desired terms to your lender over an email, because they’re usually unwilling to bargain to work out a deal.

If you want to have leverage over your lender, you need to get rates from other companies. This benefit exists for those still on the lookout for private student loans or student loan refinancing.

If you have an unsigned contract and rates from one lender, your preferred private lender company will be willing to compare the rates and negotiate. You can get your hands on a contract after completing the initial steps for approval and submission of an underwriting.

This strategy is ideal for students and parents to find a suitable plan with low-interest rates, but have a lender preference in mind. If the preferred lender offers higher rates than another company, the applicant can compare rates to get better loan terms while compiling the final agreement.

Negotiating On An Existing Student Loan Contract

If you’ve already signed the contract for your student loan, this strategy is for you.

Once the student loan contract is signed, the lender knows the law will support them if the debtor goes bankrupt or fails to meet their obligations. Therefore, they aren’t inclined to negotiate.

For instance, some students want to make their remaining student loan payment earlier than the schedule to cut down on their interest expense. They may want to do it by paying more than the minimum amount for some months or one lump sum payment. However, lenders typically ask them to pay the full amount, with the specified interest amount for the scheduled period—even if they pay ahead of time.

In this case, ELFI student loan refinancing is a better option than negotiating with the lenders for the borrowers. Refinancingwill allow you to consolidate your entire loan amountand get better loan terms and interest rates. It gives you leverage to reach a good deal with the lenders. However, to qualify for refinancing, you need to have a good credit score and a good debt-to-income ratio―learn more about student loan refinancing at the ELFI website.

You may also have a spot to negotiate terms if your financial position isn’t that strong. Often, when lenders are susceptible to the borrower’s financial stability and ability to pay back the loan, they adjust the rates and the terms to reduce the risk of default.

If you’re struggling to make your student loan payments every month, follow these steps for negotiation.

The Steps For Successful Loan Term Negotiations

Image Filename: college-student-negotiating-with-lender-over-call

Image Alt-Text: A college student calling student loan lender for negotiating rates and terms

Although the negotiation process may vary from one lender to another, these steps will help you understand what you should expect while negotiating loan terms.

Talk To The Authorized Person

This might sound too obvious, but finding the right person to speak with can be very challenging—surprisingly. Often customer support agents are not allowed to modify the existing loan rates. If they can’t offer the help you need, nicely ask them to connect you with someone who can better understand your concern. It will save their time and yours.

Do Your Homework And Be Prepared

You can’t just tell them that you’re struggling with student loan payments and expect them to help you. You need to be prepared and have all the details with you to explain your problem in detail in short periods. For instance, you want to tell them how you earn X dollars every month and areleft with only X dollars for the loan payments, after paying for your necessary expenses, such as utilities, resident rent, medical, food, etc. Note it all down on a paper and have that paper in your hand before dialing their number. Be realistic.

Don’t Accept A Deferment Or Forbearance Offer

Most private student loan lenders will offer you a deferment solution or loan forbearance, which can do more damage than good to your finances. Tell them that you’re not looking for a temporary pause or delay in the payments because you can’t promise any change in your financial condition in the coming months. Postponing the payments will only add to your financial burdens.

Don’t Be Unreasonable

Unreasonable requests won’t lead you anywhere and will only waste the time of both parties. You can’t expect your lender to forgive your loan or reduce it just because you asked politely. Examples of reasonable and workable requests are:

• You are asking to lower the interest rates on your student loan.
• You are asking to extend the payment term for your loan.

Whether you’re looking for a new student loan with flexible terms and lowest interest rates or looking for student loan refinancing for more manageable repayment of your existing loan, ELFI (Education Loan Finance)can help. Their Personal Loan Advisors will guide you through the entire process and help you pick the perfect plan according to your unique needs.